Strategic Planning and Marketing
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FM_Stevens_Healthcare.pdf
Strategic Planning and Marketing in Healthcare Organizations
Robert Stevens Southeastern Oklahoma State University
Lawrence S. Silver Southeastern Oklahoma State University
Robert Stevens, Lawrence S. Silver Strategic Planning and Marketing in Healthcare Organizations
Editor in Chief, AVP: Steve Wainwright
Sponsoring Editor: Greer Lleuad
Development Editors: Carrie Brandt and Sophia Sproule
Assistant Editor: Jaime Anderson
Editorial Assistant: Teresa Bdzil
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ISBN-10: 1621781593
ISBN-13: 978-1-62178-159-2
Copyright © 2015 Bridgepoint Education, Inc.
All rights reserved.
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Brief Contents
Chapter 1: Planning and Marketing Perspectives. . . . . . . . . . . . . 1
Chapter 2: The Strategic Planning Process . . . . . . . . . . . . . . . . . 21
Chapter 3: Defining Organizational Vision, Values, and Mission. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Chapter 4: Environmental Analysis . . . . . . . . . . . . . . . . . . . . . . . . 53
Chapter 5: Establishing Organizational Objectives . . . . . . . . . 75
Chapter 6: Developing Strategic and Operational Plans . . . . 93
Chapter 7: Managing Marketing Activities . . . . . . . . . . . . . . . . 117
Chapter 8: The Marketing Planning Process . . . . . . . . . . . . . . 143
Chapter 9: Assessing Market Opportunities and Targeting Market Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Chapter 10: Customer Acquisition and Relationship Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
Chapter 11: Marketing Programs and Tactics . . . . . . . . . . . . . . 197
Chapter 12: Implementation, Evaluation, and Control . . . . . . 215
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .239 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .250
Contents
About the Authors xiii Acknowledgments xv Preface xvii
Chapter 1 Planning and Marketing Perspectives 1
Introduction 2
1.1 Planning in Healthcare Organizations 2
1.2 The Importance of Strategic Planning and Marketing 4 The Designer Approach 4 Strategic Planning Process Overview 5
1.3 The Concept of Strategic Planning 6 Types of Plans 7 Who Should Be Involved in Crafting the Strategic Plan 8 Advantages of Planning 8
1.4 Resistance to the Planning Process 10 Lack of Management Training 11 Planning Is Thought to Be Irrelevant 11 Implementation Problems 11
1.5 Revenue-Source Influences on Planning 13
1.6 The Success Formula in Healthcare Organizations 14
Summary & Resources 16
Chapter 2 The Strategic Planning Process 21
Introduction 22
2.1 Strategic Planning Overview 22
2.2 The Strategic Planning Process 23 Step 1: Defining Vision and Mission 24 Step 2: Analyzing the Environment 25
Contents
Step 3: Establishing Objectives 26 Step 4: Developing Strategy 27 Step 5: Creating Operational Plans 27 Step 6: Implementing Evaluation and Control Measures 28
2.3 The Role of Stakeholders in Strategic Plan Development 29 Board Members 30 Strategic Planning Committee 31 Chief Executive Officer/Chief Operating Officer 31 Medical Staff 32 Department Heads 32 Patients and Community 32 Vendors 33
2.4 Strategic Planning as an Ongoing Process 33
2.5 Strategy Implementation and Evaluation 34
Summary & Resources 34
Chapter 3 Defining Organizational Vision, Values, and Mission 37
Introduction 38
3.1 The Importance of Defining a Vision Statement 38
3.2 Organizational Values or Guiding Principles 39
3.3 Basic Elements of an Effective Mission Statement 40
3.4 Writing Vision and Mission Statements 41 Determine the Fundamental Reason for Being 42 Identify Principal Methods for Delivering Need Satisfaction 43 Determine the Scope of Mission 43 Determine What the Individual Unit Is Accountable For 43 Prepare a Rough Draft of the Mission Statement 43
3.5 Sample Mission Statements 44 Evaluating a Mission Statement 47 Evaluating a Vision Statement 48
Summary & Resources 49
Contents
Chapter 4 Environmental Analysis 53
Introduction 54
4.1 External Analysis of Dominant Environmental Driving Forces 54
4.2 Legislative Processes and Implementation Issues 57 The Federal Legislative Process 57 Landmark Health Legislation in the United States 57 The Effects of Reform on HCO Strategy 58
4.3 The Five Forces Model of Industry Analysis 61
4.4 Assessing Environmental Opportunities and Threats 62
4.5 Conducting an Internal Analysis 63
4.6 Assessing Strengths and Weaknesses: The Search for a Distinctive Competence 64 Management and Planning Systems 64 Financial Resources 65 Marketing Resources 66 Operations/Services Resources 66 Using a SWOT Analysis 67 Making Assumptions 69
4.7 Healthcare Delivery Methods 71 Metrics to Measure Costs and Outcomes 71 Methods of Reimbursement 72
Summary & Resources 72
Chapter 5 Establishing Organizational Objectives 75
Introduction 76
5.1 The Nature and Role of Objectives 76 Management by Objectives 77 Alternatives to Management by Objectives 78
5.2 The Characteristics of Good Objectives 78 SMART Objectives 80 Examples of Effective Objectives 81 Seven Rules for Writing Effective Strategic Objectives 82
Contents
5.3 The Types of Objectives Included in a Strategic Plan 82 Productivity Objectives 84 Funding Objectives 84 Patient and Client (Customer) Objectives 85
5.4 The Use of Environmental Analysis Data to Set Objectives 85
5.5 The Periodic Review of Objectives 86
Summary & Resources 90
Chapter 6 Developing Strategic and Operational Plans 93
Introduction 94
6.1 Strategy Concepts 94 Components of Organizational Strategy 94 Generic Strategies 95 Diversification Strategies 98 Blue Ocean Strategy 100
6.2 Strategies for Large Multi-Unit Organizations 102 The Boston Consulting Group Matrix 102 Basic Strategies for These Units 103 Growth Strategies 104
6.3 Tactical Issues 107
6.4 Factors Influencing Strategy Selection 107
6.5 Operational Plans 108
Summary and Resources 112
Chapter 7 Managing Marketing Activities 117
Introduction 118
7.1 What Is Marketing? 118
7.2 The Marketing Concept 119
Contents
7.3 The Organizational Planning and Marketing Planning Connection 121
7.4 Marketing Strategy 124 Product/Market-Oriented Strategies 125 Competitive Marketing Strategies 127 Positioning Strategies 128 Factors Influencing the Strategy Selected 129
7.5 Transition from Strategy to Tactics 130 Product/Service 130 Place 131 Promotion 131 Price/Fees 132
7.6 Organizational Designs for Marketing 133
7.7 The Ethical Orientation of Marketing Decisions 135
Summary & Resources 138
Chapter 8 The Marketing Planning Process 143
Introduction 144
8.1 Marketing Planning Overview 144
8.2 The Marketing Plan 145 Situation Analysis 145 Setting Objectives 149 Marketing Strategy Selection 150
8.3 The Marketing Planning Process 151 The Marketing Mix 151 The Marketing Budget 151 Marketing Program 153 Plan Evaluation and Control 154
8.4 Coordinating the Planning Process 154 Marketing and Marketing Communications 155 Techniques for Coordination 156
Summary & Resources 157
Contents
Chapter 9 Assessing Market Opportunities and Targeting Market Segments 161
Introduction 162
9.1 Market Opportunity Analysis 162
9.2 Market Demand Analysis 163 Identifying a Market 164 Bases for Market Segmentation 165
9.3 Market Potential 169 Revenue Index Measure of Relative Potential 169 Market Factor Method 170 Regression Analysis Method 170 Not-for-Profit Financial Analysis 172 Cost Analysis 172
9.4 Market Segmentation and Target Marketing 175
Summary & Resources 178
Chapter 10 Customer Acquisition and Relationship Management 181
Introduction 182
10.1 Organizational Growth 182 Product/Service Life Cycles 182 Individual Adoption Stages 183
10.2 Attracting New Customers 184
10.3 Customer Relationship Management 186
10.4 Database Marketing 187 Advantages of Database Marketing 188 Data Collection and Manipulation 188 Using the Data 189
10.5 Managing Real and Virtual Customer Interactions 190 Social Media in Healthcare 191 Managing Customer Service 192
Contents
Using a Marketing Agency 193 Website Design 194
Summary & Resources 194
Chapter 11 Marketing Programs and Tactics 197
Introduction 198
11.1 Product/Service Mix Elements 198 Characteristics of Services 198 Quality Service Dimensions 201 Improving Customer Perceptions of Service Quality 202
11.2 Price/Fee Mix Elements 203
11.3 Place/Delivery Mix Elements 204
11.4 Promotion Mix Elements 204
11.5 Community/Public Relations 206 Crisis Management 207
11.6 Implementing Strategies With Tactics 208 Managing Marketing Tactics 209 Social Media Programs—Connecting With Stakeholders 209
Summary & Resources 211
Chapter 12 Implementation, Evaluation, and Control 215
Introduction 216
12.1 Implementation 216 Implementation Skills 216 Internal Implementation Issues 218
12.2 Resistance to Change 219
12.3 Organizing for Implementation 220 People 220 Systems 221 Corporate Culture 222 Structure 223 Types of Organizational Structures 224
Contents
12.4 Evaluation and Control of Plans 226 Integration of Planning and Control 226 Timing of Information Flows 227
12.5 Performance Evaluation and Control 227 The Balanced Scorecard Approach 228 Revenue Control 230 Cost Control 232 Profit Control 233 Patient Feedback 233 Establishing Procedures 234
Summary & Resources 235
Glossary 239
References 250
Robert Stevens, PhD, is John Massey Professor of Busi- ness, Management and Marketing Department in the John Massey School of Business at Southeastern Okla- homa State University, Durant, Oklahoma. During his dis- tinguished career, Dr. Stevens has taught at the University of Arkansas, the University of Southern Mississippi, Oral Rob- erts University, University of Louisiana, Monroe, and Hong Kong Shue Yan University. His repertoire of courses has included marketing management, business research, sta- tistics, marketing research, and strategic management. He is the author or co-author of 30 books and well over 200 articles and cases. He has published his research find- ings in a number of business journals and numerous pro- fessional conference proceedings. He is co-editor of the Health Marketing Quarterly and Services Marketing Quar- terly, and serves on the editorial boards of two other professional journals. Dr. Stevens has acted as a marketing consultant to local, regional, and national organizations and is the owner of two small businesses.
Lawrence S. Silver, DBA, is John Massey Professor of Marketing in the John Massey School of Business at Southeastern Oklahoma State University. He has taught at Louisiana Tech University, Troy University, and Missis- sippi College. He spent over 20 years as an independent insurance agent and holds the Chartered Property Casu- alty Underwriter (CPCU) and Chartered Life Underwriter (CLU) designations. Dr. Silver has taught marketing man- agement, strategic management, marketing research, consumer behavior, personal selling, and international marketing. He co-authored The Concise Encyclopedia of Insurance Terms, Essentials of Marketing Research, 3rd Edition as well as over 40 articles and cases. He has pub- lished in a number of business journals and at numerous professional conferences. Dr. Silver serves on the edito- rial boards of Health Marketing Quarterly and Services Marketing Quarterly and is the director of the MBA program at the John Massey School of Business at Southeastern Oklahoma State University.
About the Authors
Acknowledgments
A book is seldom the work of the authors alone but involves the efforts of many others. We especially want to thank Stephanie Metts, Special Assistant to the Executive Dean for Aca- demic Affairs at Southeastern Oklahoma State University, for her diligence in reviewing and formatting the chapters, tables, and charts. We also have a big “thank you” to the editorial staff of Bridgepoint Education for their input in improving the quality of this book: Greer Lleuad, sponsoring editor; Carrie Brandt and Sophia Sproule, development editors; Jaime Anderson, assistant editor; Teresa Bdzil, editorial assistant; and Lauren LePera, production editor.
The authors would also like to thank the following reviewers, as well as other anonymous reviewers, for their valuable feedback and insight:
Faisal H. Aboul-Enien, Ashford Univeristy
Paul Buta, Boston University
Conrad J. Francis, Texas Tech University
Sharon D. Hunt, Texas Tech University
Mark J. Kay, Montclair State University
Robert C. Smiles, Ashford University
Preface
Managers in healthcare organizations identify how to best satisfy the needs of a wide range of stakeholders. These stakeholders may include communities, patients, employees, profes- sional organizations, insurers, and the government, among others, and it is not uncommon for these parties to have conflicting expectations. As a result, strategic planning is a crucial element of management in the healthcare environment. Strategic Planning and Marketing in Healthcare Organizations will help readers understand the importance of planning in health- care organizations and prepare those who will manage healthcare organizations for the types of challenges that are unique to the industry. The information in this book will help readers maximize their understanding and implementation of strategic management, competitive analysis, change management, and marketing planning and strategy. Readers will learn about why it is essential for healthcare organizations to clearly define their vision and mission statements, assess strengths and weaknesses, establish organization objectives, and develop strategic and operational plans.
Textbook Features Strategic Planning and Marketing in Healthcare Organizations includes a variety of features to help readers understand key concepts and further explore the topics discussed in each chapter:
Feature boxes help readers think critically about different real-world examples and apply chapter concepts.
Videos and interactive multimedia embedded in certain chapters help illustrate specific concepts using clean, simple explanations.
Chapter summaries and key points review the key ideas in each chapter.
Key Terms list and define important concepts discussed in each chapter, offering an oppor- tunity for a final review of chapter concepts. In the e-book, students can click on the term to reveal the definition and quiz themselves in the process. A complete listing of key terms is also provided in the Glossary.
Interactive flashcards in the e-book also allow readers to test their knowledge of the key concepts discussed in each chapter.
Critical Thinking Questions at the end of each chapter guide readers toward critical analy- sis of topics explored in the chapters and help them assess their levels of understanding.
